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Bunnell Corporation is a manufacturer that uses job-order costing. On January 1, the company’s inventory balances were as follows:

Raw materials	$	60,500
Work in process	$	20,800
Finished goods	$	57,600

The company applies overhead cost to jobs on the basis of direct labor-hours. For the current year, the company’s predetermined overhead rate of $11.25 per direct labor-hour was based on a cost formula that estimated $450,000 of total manufacturing overhead for an estimated activity level of 40,000 direct labor-hours. The following transactions were recorded for the year:

a) Raw materials were purchased on account, $622,000.

b) Raw materials use in production, $591,800. All of of the raw materials were used as direct materials.

c) The following costs were accrued for employee services: direct labor, $400,000; indirect labor, $150,000; selling and administrative salaries, $280,000.

d) Incurred various selling and administrative expenses (e.g., advertising, sales travel costs, and finished goods warehousing), $400,000.

e) Incurred various manufacturing overhead costs (e.g., depreciation, insurance, and utilities), $300,000.

f) Manufacturing overhead cost was applied to production. The company actually worked 41,000 direct labor-hours on all jobs during the year.

g) Jobs costing $1,360,750 to manufacture according to their job cost sheets were completed during the year.

h) Jobs were sold on account to customers during the year for a total of $3,330,000. The jobs cost $1,370,750 to manufacture according to their job cost sheets.

Record the raw materials used in production. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal

Answer 1

1)	Transaction	General Journal					Debit	Credit
	b.	Work in process inventory					591,800
		Raw materials inventory						591,800
2)	Ending balance in Raw Materials
	Raw materials
	Beg.bal	60,500
	a.	622,000	591,800	b.
	End bal	90,700
3)	Transaction	General Journal					Debit	Credit
	c.	Work in process inventory					400,000
		Manufacturing overhead					150,000
		Selling & administrative salaries					280,000
		Factory wages payable						830,000
4)	Manufacturing overhead applied			(41000*11.25)			461250	answer
5)	Total manufacturing cost added during the year
	Direct materials				591,800
	Direct labor				400,000
	overhead applied				461,250
	Total.				1,453,050
	total manufacturing cost				1,453,050	answer
6)	Transaction	General Journal					Debit	Credit
	g.	Finished goods inventory					1,360,750
		Work in process inventory						1,360,750
7)	Work in process
	Beg.bal	20,800	1,360,750	g.
	b.	591,800
	c.	400,000
	f.	461,250
	End bal	113,100
8)	total actual manufacturing overhead cost					450,000	answer
	indirect labor			150000
	Various manfuacturing cost			300,000
	total			450000
9)	overapplied overhead			11,250	answer
10)	Cost of goods available for sale				1,418,350	answer
	(57600+1,360,750)
11)	Transaction	General Journal					Debit	Credit
	h.	cost of good sold					1,370,750
		Finished goods inventory						1,370,750
12)	Finished goods	Finished Goods
	Beg.bal	57,600
	g.	1,360,750	1,370,750	h.
	End bal	47,600
13)	Adjusted cost of goods sold				1,359,500
	(1,370,750-11250)
14)	Gross margin				1,970,500
	(sales - adjusted cost of goods sold)
15)	Net operating income				1,290,500	answer
	Gross margin			1,970,500
	less
	Selling & adm salaries			-280,000
	Various selling & adm			-400,000
	Net operating income			1,290,500